Treasury Management Services

Retirement Services

Safety and Success of 401(k) Programs

May 3, 2013

With so much uncertainty surrounding the stability of America’s financial and investment sectors, the safety and success of 401(k) programs has recently come under fire from the media, political and private sectors. Last week, a featured report by the PBS news program Frontline charged that Wall Street, advisors and industry insiders are taking advantage of investors through unfair fees and practices associated with their retirement plans. These reports attempt to characterize retirement investing as a ‘gamble’ in the current market, complete with confusing rules, unclear investment practices and excessive fees.

A recent PDF report by Investment Company Institute (ICI) and research completed by the retirement consulting team at First Western Trust seeks to combat these claims and expose the truth behind a safe and solid approach to retirement investments. For a majority of Americans, 2012 saw them paying less than 1% in annual mutual fund fees. The reality for most Americans who work with a trusted financial advisor is:

Participants in retirement plans that were appropriately diversified and continued to invest during the recent downturns are seeing solid returns and growth during the current economic stabilization.

By bundling the assets of many individuals into 401(k) plans, an advisor can demand institutional investment management fees which are more inexpensive and transparent when compared to investments used in retail accounts. 401(k) plans still remain a highly effective tool for accumulating retirement income.

Through our research we identified some interesting statistics about 401(k) investments that point towards their strength as an investment tool:

More people are saving for retirement than ever before – 100 million workers and retirees have saved $10.5 trillion by investing in 401(k) platforms (Investment Company Institute, 2013)

It is anticipated that more than 60% of today’s 401(k) participants in their late 30s to mid 40s will accumulate enough in their 401(k) accounts to replace more than half of their salary (Investment Company Institute, 2005)

401(k) retirement plans cover more workers today than were covered by traditional defined benefit pensions at their historical peak. Less than 5% of Americans who don’t have access to plans save on their own and 70% of those with access save in their employer-sponsored plan. (Investment Company Institute, 2012)

At First Western Trust we take a connected view of our clients’ entire financial picture and create tailored solutions to help them reach their financial goals Our retirement consulting team provide clients sponsoring 401(k) plans the information necessary for their plan participants to feel confident about their investment decisions. Transparent fee structures and a strong advisor relationship are at the heart of First Western Trust’s retirement investment approach.

If you have any questions about an existing 401(k) plan or would like to learn more about First Western Trust and our ConnectView® approach to wealth planning, please contact Paula Hendrickson, CFP®, C(k)P, Director Retirement Plan Consulting at 303.634.2721 or Paula.Hendrickson@myfw.com